Making the labour market work better
A Department for Education and Employment case study

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Page 4: The nature of the problem

Young people face particular difficulties in the labour market. On entering the labour market, some young people find it difficult to obtain a secure foothold. Their lack of experience and limited skills mean that employers can be reluctant to take them on and incur the costs of training them. In January 1997, 18-24 year olds made up a quarter of the claimant unemployed. Young unemployed people usually have a relatively high exit rate (i.e. they find work relatively quickly) but once scarred by long-term unemployment, they have difficulties settling down into stable employment. Being young, they have a long period of potential working life ahead of them and therefore the damage of unemployment to their employability represents a greater economic loss to society.

In July 1997, the Labour Government unveiled its rationale for a New Deal by emphasising a new approach to welfare reform in this country:

‘In the new economy...where capital, inventions, even raw materials are mobile, Britain has only one truly national resource: the talent and potential of its people. Yet in Britain today one in five of working age households has no one earning a wage. In place of welfare there should be work... It is time for the welfare state to put opportunity again in people’s hands. First, everyone in need of work should have the opportunity to work. Second, we must ensure work pays. Third, everyone who seeks to advance through employment and education must be given the means to advance. So we will create a new ladder of opportunity that will allow the many, by their own efforts to benefit from opportunities once open only to a few.’

The 1997 budget then (amongst other reforms) went on to announce preliminary ideas for the New Deal and these were expanded in the March 1998 Budget.

The New Deal for young people

There are a number of New Deals aimed at different groups of people disadvantaged in the labour market. In this case study, we will focus on the New Deal for Young People. The New
Deal is for those aged 18-24 who have been claiming Jobseeker’s Allowance for six months or more. It started in January 1998 in 12 ‘Pathfinder’ areas before going nation-wide in April 1998.

The New Deal sets out to offer young people continuing, high quality support which is sensitive to their individual strengths, weaknesses and needs and is relevant to conditions in their local area.

It provides:

  • one-to-one help and individual support from a Personal Adviser
  • access to a wide range of specialist help to tackle barriers to employment
  • good quality work, education and training.


The New Deal offers structured support in three main ways:

  • the Gateway
  • New Deal options
  • follow-through.

The Gateway

Department For Education And Employment 4 Diagram 3Young people who enter New Deal will begin by spending up to four months in the Gateway. On entering the Gateway the young person will be allocated a personal adviser who will help and support them throughout their time on New Deal. They will discuss their needs, ambitions and options and agree their New Deal Action Plan.

Many young people will already have good employment prospects, having the necessary skills, abilities and motivation. Intensive careers advice and assistance with finding and applying for jobs should help them move quickly and successfully into employment.

Others may need more help. The personal adviser will have access to a range of local counselling and support services tackling immediate barriers to employment, whether over careers advice, basic skills such as reading or numeracy, or broader issues like homelessness or debt problems.

Department for Education and Employment | Making the labour market work better
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